AICPA CPA-Business Exam - Topic 2 Question 72 Discussion

Actual exam question for AICPA's CPA-Business exam

Question #: 72
Topic #: 2

[All CPA-Business Questions]

Under the expenditure approach, GDP can be calculated as the sum of:

AConsumption, money supply, government purchases, and exports.

BConsumption, investment, transfer payments, and imports.

CConsumption, investment, government purchases, and net exports.

DConsumption, investment, government purchases, and foreign exchange.

Show Suggested Answer

Suggested Answer: D

Choice 'd' is correct. Inspections. Inspections are part of order costs, not carrying costs.

Choices 'a' and 'c' are incorrect. Inventory carrying costs include all costs associated with warehousing (storing) inventory (e.g., storage, insurance, obsolescence, and spoilage associated with holding inventory).

Choice 'b' is incorrect. The economic cost of holding inventory includes the implicit (opportunity) cost of foregoing a return on the money invested in inventory.

by Lizette at Jul 25, 2023, 09:00 AM

Limited Time Offer

25%

Off

Get Premium CPA-Business Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Destiny

3 months ago

I thought it included transfer payments too?

upvoted 0 times

...

Bernadine

4 months ago

Totally agree with C, it makes the most sense!

upvoted 0 times

...

Chau

4 months ago

Wait, are we sure about net exports? Sounds off.

upvoted 0 times

...

Alishia

4 months ago

Definitely C! That’s the standard formula.

upvoted 0 times

...

Tula

4 months ago

GDP = Consumption + Investment + Gov Purchases + Net Exports.

upvoted 0 times

...

Myrtie

5 months ago

I feel like D could be a trick option since foreign exchange isn’t typically part of GDP calculations, right?

upvoted 0 times

...

Gianna

5 months ago

I’m a bit confused; I thought transfer payments were included in GDP calculations, but maybe they’re not under the expenditure approach?

upvoted 0 times

...

Shawnee

5 months ago

I remember practicing a question similar to this, and I think it was about consumption and investment being key components.

upvoted 0 times

...

Emilio

5 months ago

I think the right answer might be C, but I’m not entirely sure about the net exports part.

upvoted 0 times

...

Remedios

5 months ago

I'm confident the answer is B. Motion. That's the element of waste that deals with unnecessary movement and transportation of materials.

upvoted 0 times

...

Dorothy

5 months ago

I vaguely remember that we discussed this in class; isn't it related to the time after a sale when payment comes in? So, maybe option A?

upvoted 0 times

...

Garry

5 months ago

Okay, I've got a strategy for this. I'll focus on the factbox option, as that seems like the most logical way to surface the related sales total data on the form. I just need to make sure I understand how to configure the factbox properly.

upvoted 0 times

...

Caitlin

10 months ago

B) Consumption, investment, transfer payments, and imports. Hmm, sounds like a recipe for a really depressing GDP calculation. Where's the fun in that?

upvoted 0 times

...

Lauran

10 months ago

D) Consumption, investment, government purchases, and foreign exchange. Ah, the good old 'foreign exchange' approach to GDP. I hear that's the preferred method in the Galactic Empire.

upvoted 0 times

...

Devorah

10 months ago

A) Consumption, money supply, government purchases, and exports. Wait, what? Money supply? That's definitely not part of the expenditure approach. I'm pretty sure my calculator has a GDP formula button, though.

upvoted 0 times

Audry

8 months ago

C) Consumption, investment, government purchases, and net exports.

upvoted 0 times

...

Helaine

8 months ago

A) Consumption, money supply, government purchases, and exports.

upvoted 0 times

...

Gregoria

9 months ago

B) Consumption, investment, transfer payments, and imports.

upvoted 0 times

...

Shelton

9 months ago

C) Consumption, investment, government purchases, and net exports.

upvoted 0 times

...

Kayleigh

10 months ago

B) Consumption, investment, transfer payments, and imports. Ah, the classic mistake of confusing the expenditure approach with the income approach. Gotta love these tricky GDP questions!

upvoted 0 times

Pamella

9 months ago

C) Consumption, investment, government purchases, and net exports. Understanding the different approaches to calculating GDP can be challenging, but it's important to grasp the concepts.

upvoted 0 times

...

Lourdes

9 months ago

B) Consumption, investment, transfer payments, and imports. It's easy to mix up the components, but with practice, you'll get the hang of it!

upvoted 0 times

...

Shawna

9 months ago

C) Consumption, investment, government purchases, and net exports. That's correct! The expenditure approach focuses on these components to calculate GDP.

upvoted 0 times

...

Camellia

10 months ago

I was sure it was D) Consumption, investment, government purchases, and foreign exchange. I should have paid more attention in my macroeconomics class.

upvoted 0 times

Brice

9 months ago

Bulah: Nope, it's C. Don't worry, it can be confusing sometimes.

upvoted 0 times

...

Bulah

9 months ago

User 2: Really? I thought it was D) Consumption, investment, government purchases, and foreign exchange.

upvoted 0 times

...

Shayne

10 months ago

User 1: It's actually C) Consumption, investment, government purchases, and net exports.

upvoted 0 times

...

Barrie

10 months ago

C) Consumption, investment, government purchases, and net exports. This is the correct answer as per the expenditure approach to calculating GDP.

upvoted 0 times

Eleonora

9 months ago

So, GDP is the sum of consumption, investment, government purchases, and net exports.

upvoted 0 times

...

Malcolm

9 months ago

That's right! The expenditure approach to calculating GDP includes those components.

upvoted 0 times

...

Quiana

10 months ago

I think the correct answer is C) Consumption, investment, government purchases, and net exports.

upvoted 0 times

...

Kenny

11 months ago

I'm not sure, but C seems to be the most logical choice based on the components of GDP.

upvoted 0 times

...

Francene

11 months ago

I agree with Aleta, C makes sense because it includes government purchases and net exports.

upvoted 0 times

...

Aleta

11 months ago

I think the answer is C.

upvoted 0 times

...